The National Company Law Appellate Tribunal (NCLAT) on May 20, 2026, commenced joint hearings on crucial appeals challenging the liquidation of Vrundavan’s corporate assets and the judicial censure of its resolution professional. The appellate tribunal, chaired by Justice Mohd. Faiz Alam Khan, is reviewing the dual petitions in a hybrid hearing mode to determine if the lower court exceeded its authority by dismantling a creditor-approved restructuring plan. The outcome of these proceedings is poised to redefine the boundaries of judicial intervention in India‘s corporate insolvency framework.
The Origin of the Dispute and the NCLT Liquidation Order
The legal battle stems from a September 27, 2024, order passed by the National Company Law Tribunal (NCLT) Ahmedabad Bench. In that decision, the adjudicating authority rejected a comprehensive resolution plan submitted by Lorenzo Vitrified Tiles Private Limited, which had already secured the mandatory approval of the Committee of Creditors (CoC). Rather than sanctioning the corporate revival, the NCLT ordered the immediate liquidation of the corporate debtor and recorded sharp, adverse observations regarding the conduct of the resolution professional (RP) overseeing the process.
In response, two interconnected appeals were lodged at the appellate level. The first, CA (AT) (Ins) No. 1950 of 2024, was filed by Lorenzo Vitrified Tiles as the successful resolution applicant seeking to salvage its commercial investment. The second, CA (AT) (Ins) No. 1952 of 2024, was preferred by the RP, who is fighting to expunge the damaging remarks that threaten their professional standing and future appointments under the Insolvency and Bankruptcy Code (IBC).
Commercial Wisdom versus Judicial Oversight
The primary legal debate centers on the sanctity of the “commercial wisdom” of the Committee of Creditors. Under established IBC jurisprudence, the Supreme Court of India has repeatedly ruled that the financial decisions of the CoC are paramount and largely non-justiciable. Courts are generally expected to facilitate corporate resurrection rather than mandate liquidation, provided the resolution plan complies with statutory guidelines.
Lorenzo Vitrified Tiles argues that the Ahmedabad bench overstepped its statutory boundaries by substituting its own subjective judgment for the collective financial wisdom of the lenders. According to legal experts, when an adjudicating authority rejects a CoC-approved plan, it must present clear evidence of structural or legal non-compliance. The appellant claims that the rejection of their plan was procedurally flawed and sets a dangerous precedent that could deter future strategic investors from bidding on distressed assets.
Defending the Integrity of Insolvency Professionals
The parallel appeal filed by the Resolution Professional highlights the growing vulnerability of insolvency administrators in India. The RP contends that the lower tribunal’s adverse findings were unwarranted and made without giving the professional an adequate opportunity to be heard. This aspect of the case has drawn significant attention from the Insolvency and Bankruptcy Board of India (IBBI) and the wider professional community, as reputation is a critical asset for practitioners in this highly regulated field.
Insolvency professionals argue that judicial overreach and personal censures create a chilling effect, making qualified experts hesitant to take on complex, high-stakes restructuring assignments. The NCLAT’s review will scrutinize whether the NCLT Ahmedabad bench followed the principles of natural justice before recording damaging remarks against the officer of the court.
Implications for the Insolvency Ecosystem
The resolution of this case will carry major implications for both the manufacturing sector and the broader insolvency ecosystem in India. For the ceramic and vitrified tile industry, a prolonged liquidation process for Vrundavan threatens to erode asset value, cause job losses, and leave creditors with steep haircuts instead of a structured recovery.
For the legal and financial sectors, the NCLAT’s ruling will clarify the exact limits of an adjudicating authority’s power to reject a viable, creditor-approved resolution plan. It will also establish much-needed guidelines on the standard of proof required before a court can penalize or criticize an RP’s professional conduct during administration.
Moving forward, market participants and legal analysts will closely monitor the NCLAT’s final judgment to see if it reinforces the primacy of creditor decisions or expands the supervisory powers of the tribunal. The upcoming rulings will serve as a critical indicator of whether India’s insolvency regime remains committed to its foundational goal of corporate rescue, or if judicial skepticism will continue to pave the way for liquidation.
